Teachers Union Getting in the Way of Christie’s Budget Plan to Cut Health Costs

TRENTON — Gov. Chris Christie’s intention to save a quarter-billion dollars in the new budget through changes to the health plans for public workers and retirees has hit a major snag: the New Jersey Education Association says it won’t support it.

Unions and the administration hold equal numbers of seats on the two committees that decide on the design on the health plans, so the NJEA opposition means there won’t be changes in the teachers’ plan.

“Those conversations are still ongoing with the (State Health Benefits Plan),” acting state Treasurer Ford Scudder told lawmakers. “However, the members of the (School Employees Health Benefits Plan) have said they have no desire to engage in any negotiations whatsoever, even if it helps their members.”

NJEA President Wendell Steinhauer said the unions would favor changes that lower premiums but that the union mistrusts Christie because the state didn’t follow through on promises under 2011 pension and health benefits reforms.

“No, we’re not looking to make changes in it just because the governor says ‘I’m demanding $250 million.' We don’t accept that,” Steinhauer said. “He’s just saying, ‘Find money,’ he’s not saying, ‘Find it in a win-win situation for members and for the state.’”

Last year, the NJEA agreed to an earlier round of money-saving changes on things such as compound prescriptions and hepatitis C medicine. The State Health Benefits Plan, for workers other than school employees, also approved three additional smaller changes.

Between the two health plans, those earlier changes are expected to save the state $197 million in the coming year – $135 million for the SHPB and $62 million for the SEHBP. Even with that, state healthcare costs are still projected to increase by $290 million in 2017.

Steinhauer said teachers “have been paying through the nose” for benefits since 2011 and aren’t interested in further negotiations with the Christie administration.

“Our members have been losing money, net pay, in their paychecks every year since the implementation of this,” he said. “We have given more than our share of this to health benefits and for the governor to want to reach back in again without any promise of keeping any deal, there’s really not much sense in negotiating with him if we have to keep keeping our side of the bargain and he never does.”

The changes under consideration include ideas such as changes to prescription benefits, such as further emphasizing generic and mail-order drugs and ‘step therapy’ in which high-cost options aren’t used until after lower-cost ones are tried. Other options include use of Medicare Advantage plans, higher fees for using an emergency room if an urgent-care clinic would have sufficed and more use of telemedicine.

If that goal isn’t met by the plan design committees, Scudder said the lawmakers could implement changes such as out-of-network care restrictions though a new law or simply include the savings in the budget and including language in the bill that gives an entity the authority to determine the changes.

Scudder even brought up the idea of ending the use of labor-management panels with equal voices to oversee the health plan designs, as created under the 2011 pension-benefit reforms: “It could be legislation to say: ‘You know what? Having an even split on the committees doesn’t make sense, between labor and the executive. We’re going to add a member to the executive side.’”

“It could be a lot of different ways to get there that you would think the plan design committees would rather decide for themselves than have it decided by somebody else,” Scudder said.

Steinhauer thinks the likelihood of the Legislature acting is unlikely.

“Yes, they could propose that, but I’d say it’s highly unlikely to move,” Steinhauer said. “That’s all nice, but we’re refusing to connect healthcare demands to the pension funding. The governor’s already proved he can’t be trusted on anything having to do with pension funding.”

The problem is that if the design committees can’t save that amount of money, and lawmakers don’t intercede with their own action, the 2017 budget would start out of balance, which isn’t allowed. So either other spending would have to be cut, or money would have to be moved from the surplus.

That surplus is already too small. Among the state’s plans for coping with a shortfall in income-tax collections is to tap 30 percent of the surplus, $239 million. That reduces the cushion to $548 million, equal to just 1.6 percent of spending.

If it were to be relied upon to cover another $250 million shortfall, that would drain more than 45 percent of what’s left in the surplus, lowering it to 0.8 percent of spending – a nearly nonexistent rainy-day fund that would be sure to raise alarms, and perhaps lower the state’s credit rating on Wall Street.

“Given the level of surplus, those savings are now much more necessary than they were three months ago, so it’s discouraging to only have one of the plan design committees still willing to talk on reforms that would be positive for their members, the state and all the citizens of New Jersey,” Scudder said.